Google Play Store

According to foreign media reports, the reason why Google can dominate the market is that it is constantly innovating and diversifying. In most areas of intervention, Google is either the leader or dominant. Google management can ensure that its product line meets the needs of users. The composition of Google’s revenue is increasingly turning to more efficient businesses, such as Play, which can generate high revenue without much investment. Although YouTube is often thought to be Google’s next business that can generate billions of dollars in revenue, one product that has not received due attention is Google Play.

In Google Play, mobile games are the highest income category. In the first quarter of this year, the proportion of game applications in Google Play revenue increased from 80% in the same period last year to 90%. The growth of mobile devices has brought about the growth of the mobile gaming business. Google Play and the Apple App Store are platforms for promoting revenue generation. For Google, this is the first real benefit as an Android player.

Google Play - An undervalued multi-billion dollar revenue opportunity Google Play is a digital media store that offers games, music, magazines, books, movies, and TV shows. Revenue has grown from zero to YouTube in the past two years The level of revenue is expected to reach US$4.4 billion (approximately RMB 27.1 billion) this year. U.S. Bank estimates that Google Play’s revenue this year will reach 9 billion U.S. dollars (approximately RMB 55.4 billion), with net revenue of 1.5 billion U.S. dollars (about 9.2 billion U.S. dollars). Bank of America also predicts that by 2016, Google Play revenue will grow to 19 billion US dollars (about 116.9 billion yuan) - net revenue of 5.7 billion US dollars (about 35.1 billion yuan), with Apple App Store quite a level.

Although YouTube is often referred to as Google's next growth engine, Google Play is rapidly becoming equally important (if not more important) than YouTube. The growth in the number of Android smartphones and tablets, the growing number of media content libraries, the increasing number of applications, and the ever-improving payment and technology architecture have all contributed to the growth of Google Play.

Potential to Generate Higher Operating Profits and Cash Flows Despite significant revenue growth over the past few years, Google Play has not received the attention it deserves. In Google’s earnings report, Google Play’s revenue has been placed under the “authorization and other” business. Overseas is the main driving force for its growth, which is why it has received less attention. Despite low attention, Google Play’s revenue growth is faster than YouTube, but it is also an indisputable fact. Given the lower operating costs, Google Play may bring higher operating profits and free cash flow to Google.

Google is split into 30% from Google Play revenue, only to bear the costs associated with credit card processing fees, and to share some of its revenue with telecommunications partners. Google Play’s revenue grew from almost zero two years ago to a level comparable to YouTube, but did not receive the investor’s due attention. The author does not intend to underestimate the importance of YouTube - it is undoubtedly one of Google's annual revenue of billions of dollars in one of the opportunities, just want to emphasize that Google Play is an equally important business of Google.

As the importance of applications on mobile devices continues to grow, Google Play has grown rapidly. In the time of mobile device users surfing the Internet, apps accounted for 86%, and mobile web accounted for 14%. With the release of Google Play, Google has made great strides in the application space. The growth of Android operating system has greatly helped Google. Before developing applications for Android, mobile application developers usually develop applications for the Apple iOS platform. There is no doubt that Apple's application of ecological chain is even greater. Apple platform users are more active and programming is simpler. This is Apple's advantage. However, Google has begun to narrow the gap with Apple. The growth of Android makes it more important for application developers. Compared with a few years ago, there has been a significant reduction in the number of app developers with an "Apple First" mentality. Google Play will eventually benefit from these changing trends, and Android is becoming increasingly important among developers. Although developers acknowledge that the difficulty of developing applications for Android is still higher than that of iOS, the difficulty of developing applications for Android is lower than ever. I expect that as Android continues to upgrade, application development will become easier.

Application marketing is also the reason for the growth of application revenue. Simply publishing to the App Store is not enough to guarantee the success of the application. 2007-2009 was the golden age of mobile applications. At that time, developers could only make money by publishing applications to the App Store. At present, if the application wants to succeed and maximize revenue, the application needs to log on to two platforms. With over 1 million apps each on the App Store and Google Play, developers complain that their apps are often overwhelmed by the sea of ​​mobile apps and it is difficult to meet their expectations.

This situation has given birth to an industry that has acquired a large amount of venture capital, focusing on technologies that enable applications to be easily discovered in numerous applications. These companies have no exclusive partnership with the two major app stores, but they use the mobile version of Internet advertising and analytics technology to drive growth in app revenue.

App stores also have limitations. They can only help consumers discover apps based on rankings and search keywords. Currently, there are more than 1 million apps in both app stores. In this case, app developers can't rely on users to find apps, because most users won't see all apps in the app from start to finish. If an app does not rank in the top 10 or top 20, it is unlikely to be discovered by users. This is why application marketing has developed into an important industry. Application marketing has not only been limited to application stores, but has begun to recommend applications to consumers. Application marketing will influence consumers to return to the app store and download apps that have been marketed.

According to Peter Hamilton, chief executive of HasOffers, “App developers have plenty of channels to promote an app: mobile ad networks, mobile content publishers, social networks, and even TVs. These promotional channels are complex The analysis optimizes spend and produces the best results, helping to increase the number of downloads, activity, and revenue for the app."

Although Android users have lower per capita spending, their dominant market share still brings huge application revenue. If the emerging application marketing and mobile advertising industries can increase the per capita spending of Android users, Google’s application business revenue will soon not only reach comparable levels with Apple, but may even exceed the latter.

Expanding Market Coverage Because of the increasing opportunities in emerging markets, similar to Facebook, Google is also expanding its services to more markets. Although Facebook’s plan is to continue deepening its relationship with mobile operators, part of Google’s plan is to provide “a comprehensive solution to meet the needs of users in emerging markets through Android One, a low-end smartphone reference platform”. ". Given that the penetration rate of smartphones in developed countries is already quite high, emerging markets will be the key to Google’s future.

Conclusion Although the Apple platform has historically been the first choice for application developers, the importance of Android among developers is increasing. In the past year, Google Play app downloads and revenue have been growing at a high rate, which is a great opportunity for developers. Developers developing more and better apps for Android will boost Google’s revenue growth.

The multi-billion dollar business opportunities in Google Play and YouTube, its dominant position in multiple markets, double-digit profit growth expectations, and reasonable valuations make Google an attractive investment opportunity.